Senate File 535 - Enrolled

PAG LIN



  1  1                                             SENATE FILE 535
  1  2
  1  3                             AN ACT
  1  4 RELATING TO GENERAL PROVISIONS OF THE UNIFORM COMMERCIAL CODE
  1  5    RELATING TO THE CONSTRUCTION AND APPLICATION OF ITS SUBJECT
  1  6    MATTER, AND PROVIDING FOR A CONTINGENT EFFECTIVE DATE.
  1  7
  1  8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1  9
  1 10                           DIVISION I
  1 11                      REVISION TO ARTICLE 1
  1 12                            ARTICLE 1
  1 13                       GENERAL PROVISIONS
  1 14                             PART 1
  1 15             SHORT TITLE, CONSTRUCTION, APPLICATION,
  1 16                AND SUBJECT MATTER OF THE CHAPTER
  1 17                       GENERAL PROVISIONS
  1 18    Section 1.  Section 554.1101, Code 2007, is amended to read
  1 19 as follows:
  1 20    554.1101  SHORT TITLE TITLES.
  1 21    1.  This chapter shall be known and may be cited as the
  1 22 Uniform Commercial Code.
  1 23    2.  This Article may be cited as Uniform Commercial Code ==
  1 24 General Provisions.
  1 25    Sec. 2.  NEW SECTION.  554.1102A  SCOPE OF ARTICLE.
  1 26    This Article applies to a transaction to the extent that it
  1 27 is governed by another Article of this chapter.
  1 28    Sec. 3.  Section 554.1103, Code 2007, is amended to read as
  1 29 follows:
  1 30    554.1103  SUPPLEMENTARY GENERAL PRINCIPLES OF LAW
  1 31 APPLICABLE CONSTRUCTION OF THIS CHAPTER TO PROMOTE ITS
  1 32 PURPOSES AND POLICIES == APPLICABILITY OF SUPPLEMENTAL
  1 33 PRINCIPLES OF LAW.
  1 34    1.  This chapter must be liberally construed and applied to
  1 35 promote its underlying purposes and policies, which are:
  2  1    a.  to simplify, clarify, and modernize the law governing
  2  2 commercial transactions;
  2  3    b.  to permit the continued expansion of commercial
  2  4 practices through custom, usage, and agreement of the parties;
  2  5 and
  2  6    c.  to make uniform the law among the various
  2  7 jurisdictions.
  2  8    2.  Unless displaced by the particular provisions of this
  2  9 chapter, the principles of law and equity, including the law
  2 10 merchant and the law relative to capacity to contract,
  2 11 principal and agent, estoppel, fraud, misrepresentation,
  2 12 duress, coercion, mistake, bankruptcy, or and other validating
  2 13 or invalidating cause shall supplement its provisions.
  2 14    Sec. 4.  Section 554.1104, Code 2007, is amended to read as
  2 15 follows:
  2 16    554.1104  CONSTRUCTION AGAINST IMPLICIT IMPLIED REPEAL.
  2 17    This chapter being a general act Act intended as a unified
  2 18 coverage of its subject matter, no part of it shall be deemed
  2 19 to be impliedly repealed by subsequent legislation if such
  2 20 construction can reasonably be avoided.
  2 21    Sec. 5.  Section 554.1105, Code 2007, is amended by
  2 22 striking the section and inserting in lieu thereof the
  2 23 following:
  2 24    554.1105  TERRITORIAL APPLICABILITY == PARTIES' POWER TO
  2 25 CHOOSE APPLICABLE LAW.
  2 26    1.  Except as otherwise provided in this section, when a
  2 27 transaction bears a reasonable relation to this state and also
  2 28 to another state or nation the parties may agree that the law
  2 29 either of this state or of such other state or nation shall
  2 30 govern their rights and duties.
  2 31    2.  In the absence of an agreement effective under
  2 32 subsection 1, and except as provided in subsection 3, this
  2 33 chapter applies to transactions bearing an appropriate
  2 34 relation to this state.
  2 35    3.  If one of the following provisions of this chapter
  3  1 specifies the applicable law, that provision governs and a
  3  2 contrary agreement is effective only to the extent permitted
  3  3 by the law so specified:
  3  4    a.  Section 554.2402;
  3  5    b.  Section 554.4102;
  3  6    c.  Section 554.5116;
  3  7    d.  Section 554.8110;
  3  8    e.  Sections 554.9301 through 554.9307;
  3  9    f.  Section 554.12507;
  3 10    g.  Sections 554.13105 and 554.13106.
  3 11    Sec. 6.  Section 554.1106, subsection 1, Code 2007, is
  3 12 amended to read as follows:
  3 13    1.  The remedies provided by this chapter shall must be
  3 14 liberally administered to the end that the aggrieved party may
  3 15 be put in as good a position as if the other party had fully
  3 16 performed but neither consequential or special damages nor
  3 17 penal damages may be had except as specifically provided in
  3 18 this chapter or by other rule of law.
  3 19    Sec. 7.  NEW SECTION.  554.1106A  USE OF SINGULAR AND
  3 20 PLURAL == GENDER.
  3 21    In this chapter, unless the statutory context otherwise
  3 22 requires:
  3 23    1.  words in the singular number include the plural, and
  3 24 those in the plural include the singular; and
  3 25    2.  words of any gender also refer to any other gender.
  3 26    Sec. 8.  Section 554.1107, Code 2007, is amended to read as
  3 27 follows:
  3 28    554.1107  WAIVER OR RENUNCIATION OF CLAIM OR RIGHT AFTER
  3 29 BREACH.
  3 30    Any A claim or right arising out of an alleged breach can
  3 31 may be discharged in whole or in part without consideration by
  3 32 a written waiver or renunciation signed and delivered by
  3 33 agreement of the aggrieved party in an authenticated record.
  3 34    Sec. 9.  Section 554.1108, Code 2007, is amended to read as
  3 35 follows:
  4  1    554.1108  SEVERABILITY.
  4  2    If any provision or clause of this chapter or its
  4  3 application thereof to any person or circumstances
  4  4 circumstance is held invalid, such the invalidity shall does
  4  5 not affect other provisions or applications of the this
  4  6 chapter which can be given effect without the invalid
  4  7 provision or application, and to this end the provisions of
  4  8 this chapter are declared to be severable.
  4  9    Sec. 10.  NEW SECTION.  554.1108A  RELATION TO ELECTRONIC
  4 10 SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT.
  4 11    This Article modifies, limits, and supersedes the federal
  4 12 Electronic Signatures in Global and National Commerce Act, 15
  4 13 U.S.C. } 7001 et seq., except that nothing in this Article
  4 14 modifies, limits, or supersedes } 7001(c) of that Act or
  4 15 authorizes electronic delivery of any of the notices described
  4 16 in } 7003(b) of that Act.
  4 17                             PART 2
  4 18      GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION
  4 19    Sec. 11.  Section 554.1201, Code 2007, is amended to read
  4 20 as follows:
  4 21    554.1201  GENERAL DEFINITIONS.
  4 22    1.  Unless the context otherwise requires, words or phrases
  4 23 defined in this section, or in the additional definitions
  4 24 contained in other Articles of this chapter that apply to
  4 25 particular Articles or Parts thereof, have the meanings
  4 26 stated.
  4 27    2.  Subject to additional definitions contained in the
  4 28 subsequent other Articles of this chapter which are applicable
  4 29 that apply to specific particular Articles or Parts thereof,
  4 30 and unless the context otherwise requires, in this chapter:
  4 31    1.  a.  "Action" in the sense of a judicial proceeding,
  4 32 includes recoupment, counterclaim, setoff, suit in equity, and
  4 33 any other proceedings in which rights are determined.
  4 34    2.  b.  "Aggrieved party" means a party entitled to resort
  4 35 to pursue a remedy.
  5  1    3.  c.  "Agreement", as distinguished from "contract",
  5  2 means the bargain of the parties in fact, as found in their
  5  3 language or by implication inferred from other circumstances,
  5  4 including course of performance, course of dealing, or usage
  5  5 of trade or course of performance as provided in this chapter
  5  6 (sections 554.1205 and 554.2208) section 554.1303.  Whether an
  5  7 agreement has legal consequences is determined by the
  5  8 provisions of this chapter, if applicable; otherwise by the
  5  9 law of contracts (section 554.1103).  (Compare "Contract".)
  5 10    4.  d.  "Bank" means any a person engaged in the business
  5 11 of banking and includes a savings bank, savings and loan
  5 12 association, credit union, and trust company.
  5 13    5.  e.  "Bearer" means the a person in possession of an a
  5 14 negotiable instrument, document of title, or certificated
  5 15 security that is payable to bearer or endorsed indorsed in
  5 16 blank.
  5 17    6.  f.  "Bill of lading" means a document evidencing the
  5 18 receipt of goods for shipment issued by a person engaged in
  5 19 the business of transporting or forwarding goods, and includes
  5 20 an airbill.  "Airbill" means a document serving for air
  5 21 transportation as a bill of lading does for marine or rail
  5 22 transportation, and includes an air consignment note or air
  5 23 waybill.
  5 24    7.  g.  "Branch" includes a separately incorporated foreign
  5 25 branch of a bank.
  5 26    8.  h.  "Burden of establishing" a fact means the burden of
  5 27 persuading the triers trier of fact that the existence of the
  5 28 fact is more probable than its nonexistence.
  5 29    9.  i.  "Buyer in ordinary course of business" means a
  5 30 person that buys goods in good faith, without knowledge that
  5 31 the sale violates the rights of another person in the goods,
  5 32 and in the ordinary course from a person, other than a
  5 33 pawnbroker, in the business of selling goods of that kind.  A
  5 34 person buys goods in the ordinary course if the sale to the
  5 35 person comports with the usual or customary practices in the
  6  1 kind of business in which the seller is engaged or with the
  6  2 seller's own usual or customary practices.  A person that
  6  3 sells oil, gas, or other minerals at the wellhead or minehead
  6  4 is a person in the business of selling goods of that kind.  A
  6  5 buyer in ordinary course of business may buy for cash, by
  6  6 exchange of other property, or on secured or unsecured credit,
  6  7 and may acquire goods or documents of title under a
  6  8 pre=existing preexisting contract for sale.  Only a buyer that
  6  9 takes possession of the goods or has a right to recover the
  6 10 goods from the seller under Article 2 may be a buyer in
  6 11 ordinary course of business.  A "Buyer in ordinary course of
  6 12 business" does not include a person that acquires goods in a
  6 13 transfer in bulk or as security for or in total or partial
  6 14 satisfaction of a money debt is not a buyer in ordinary course
  6 15 of business.
  6 16    10.  j.  "Conspicuous":  A, with reference to a term, or
  6 17 clause is conspicuous when it is means so written, displayed,
  6 18 or presented that a reasonable person against whom which it is
  6 19 to operate ought to have noticed it.  A printed heading in
  6 20 capitals (as:  "Nonnegotiable Bill of Lading") is conspicuous.
  6 21 Language in the body of a form is "conspicuous" if it is in
  6 22 larger or other contrasting type or color.  But in a telegram
  6 23 any stated term is "conspicuous".  Whether a term or clause is
  6 24 "conspicuous" or not is for a decision by for the court.
  6 25 Conspicuous terms include the following:
  6 26    (1)  a heading in capitals equal to or greater in size than
  6 27 the surrounding text, or in contrasting type, font, or color
  6 28 to the surrounding text of the same or lesser size; and
  6 29    (2)  language in the body of a record or display in larger
  6 30 type than the surrounding text, or in contrasting type, font,
  6 31 or color to the surrounding text of the same size, or set off
  6 32 from surrounding text of the same size by symbols or other
  6 33 marks that call attention to the language.
  6 34    k.  "Consumer" means an individual who enters into a
  6 35 transaction primarily for personal, family, or household
  7  1 purposes.
  7  2    11.  l.  "Contract", as distinguished from "agreement",
  7  3 means the total legal obligation which that results from the
  7  4 parties' agreement as affected determined by this chapter and
  7  5 as supplemented by any other applicable rules of law laws.
  7  6 (Compare "Agreement".)
  7  7    12.  m.  "Creditor" includes a general creditor, a secured
  7  8 creditor, a lien creditor, and any representative of
  7  9 creditors, including an assignee for the benefit of creditors,
  7 10 a trustee in bankruptcy, a receiver in equity, and an executor
  7 11 or administrator of an insolvent debtor's or assignor's
  7 12 estate.
  7 13    13.  n.  "Defendant" includes a person in the position of
  7 14 defendant in a cross=action or counterclaim, cross=claim, or
  7 15 third=party claim.
  7 16    14.  o.  "Delivery", with respect to instruments an
  7 17 instrument, documents document of title, or chattel paper, or
  7 18 certificated securities means voluntary transfer of
  7 19 possession.
  7 20    15.  p.  "Document of title" includes bill of lading, dock
  7 21 warrant, dock receipt, warehouse receipt or order for the
  7 22 delivery of goods, and also any other document which in the
  7 23 regular course of business or financing is treated as
  7 24 adequately evidencing that the person in possession of it is
  7 25 entitled to receive, hold, and dispose of the document and the
  7 26 goods it covers.  To be a document of title, a document must
  7 27 purport to be issued by or addressed to a bailee and purport
  7 28 to cover goods in the bailee's possession which are either
  7 29 identified or are fungible portions of an identified mass.
  7 30    16.  q.  "Fault" means a default, breach, or wrongful act,
  7 31 or omission or breach.
  7 32    17.  r.  "Fungible" with respect to goods or securities
  7 33 "Fungible goods" means:
  7 34    (1)  goods or securities of which any unit is, by nature or
  7 35 usage of trade, is the equivalent of any other like unit.; or
  8  1    (2)  Goods which goods that by agreement are not fungible
  8  2 shall be deemed fungible for the purposes of this chapter to
  8  3 the extent that under a particular agreement or document
  8  4 unlike units are treated as equivalents equivalent.
  8  5    18.  s.  "Genuine" means free of forgery or counterfeiting.
  8  6    19.  t.  "Good faith", except as otherwise provided in
  8  7 Article 5, means honesty in fact in the conduct or transaction
  8  8 concerned and the observance of reasonable commercial
  8  9 standards of fair dealing.
  8 10    20.  u.  "Holder", with respect to a negotiable instrument,
  8 11 means:
  8 12    (1)  the person in possession if the of a negotiable
  8 13 instrument that is payable either to bearer or, in the case of
  8 14 an instrument payable to an identified person, if the
  8 15 identified that is the person is in possession.; or
  8 16    (2)  "Holder" with respect to a document of title means the
  8 17 person in possession of a document of title if the goods are
  8 18 deliverable either to bearer or to the order of the person in
  8 19 possession.
  8 20    21.  To "honor" is to pay or to accept and pay, or where a
  8 21 credit so engages to purchase or discount a draft complying
  8 22 with the terms of the credit.
  8 23    22.  v.  "Insolvency proceedings" proceeding" includes any
  8 24 assignment for the benefit of creditors or other proceedings
  8 25 proceeding intended to liquidate or rehabilitate the estate of
  8 26 the person involved.
  8 27    23.  w.  A person is "insolvent" who either has "Insolvent"
  8 28 means:
  8 29    (1)  having generally ceased to pay that person's debts in
  8 30 the ordinary course of business or cannot pay that person's
  8 31 debts other than as a result of a bona fide dispute;
  8 32    (2)  being unable to pay debts as they become due; or
  8 33    (3)  is being insolvent within the meaning of the federal
  8 34 bankruptcy law.
  8 35    24.  x.  "Money" means a medium of exchange currently
  9  1 authorized or adopted by a domestic or foreign government and.
  9  2 The term includes a monetary unit of account established by an
  9  3 intergovernmental organization or by agreement between two or
  9  4 more nations countries.
  9  5    25.  A person has "notice" of a fact when
  9  6    a.  the person has actual knowledge of it; or
  9  7    b.  the person has received a notice or notification of it;
  9  8 or
  9  9    c.  from all the facts and circumstances known to the
  9 10 person at the time in question the person has reason to know
  9 11 that it exists.  A person "knows" or has "knowledge" of a fact
  9 12 when that person has actual knowledge of it.  "Discover" or
  9 13 "learn" or a word or phrase of similar import refers to
  9 14 knowledge rather than to reason to know.  The time and
  9 15 circumstances under which a notice or notification may cease
  9 16 to be effective are not determined by this chapter.
  9 17    26.  A person "notifies" or "gives" a notice or
  9 18 notification to another by taking such steps as may be
  9 19 reasonably required to inform the other in ordinary course
  9 20 whether or not such other actually comes to know of it.  A
  9 21 person "receives" a notice or notification when
  9 22    a.  it comes to that person's attention; or
  9 23    b.  it is duly delivered at the place of business through
  9 24 which the contract was made or at any other place held out by
  9 25 that person as the place for receipt of such communications.
  9 26    27.  Notice, knowledge or a notice or notification received
  9 27 by an organization is effective for a particular transaction
  9 28 from the time when it is brought to the attention of the
  9 29 individual conducting that transaction, and in any event from
  9 30 the time when it would have been brought to that individual's
  9 31 attention if the organization had exercised due diligence.  An
  9 32 organization exercises due diligence if it maintains
  9 33 reasonable routines for communicating significant information
  9 34 to the person conducting the transaction and there is
  9 35 reasonable compliance with the routines.  Due diligence does
 10  1 not require an individual acting for the organization to
 10  2 communicate information unless such communication is part of
 10  3 that individual's regular duties or unless the individual has
 10  4 reason to know of the transaction and that the transaction
 10  5 would be materially affected by the information.
 10  6    28.  y.  "Organization" includes means a corporation,
 10  7 government or governmental subdivision or agency, business
 10  8 trust, estate, trust, partnership or association, two or more
 10  9 persons having a joint or common interest, or any person other
 10 10 legal or commercial entity than an individual.
 10 11    29.  z.  "Party", as distinct distinguished from "third
 10 12 party", means a person who that has engaged in a transaction
 10 13 or made an agreement within subject to this chapter.
 10 14    30.  aa.  "Person" includes means an individual, or an
 10 15 organization (See section 554.1102) corporation, business
 10 16 trust, estate, trust, partnership, limited liability company,
 10 17 association, joint venture, government, governmental
 10 18 subdivision, agency, or instrumentality, public corporation,
 10 19 or any other legal or commercial entity.
 10 20    31.  "Presumption" or "presumed" means that the trier of
 10 21 fact must find the existence of the fact presumed unless and
 10 22 until evidence is introduced which would support a finding of
 10 23 its nonexistence.
 10 24    ab.  "Present value" means the amount as of a date certain
 10 25 of one or more sums payable in the future, discounted to the
 10 26 date certain by use of either an interest rate specified by
 10 27 the parties if that rate is not manifestly unreasonable at the
 10 28 time the transaction is entered into or, if an interest rate
 10 29 is not so specified, a commercially reasonable rate that takes
 10 30 into account the facts and circumstances at the time the
 10 31 transaction is entered into.
 10 32    32.  ac.  "Purchase" means any voluntary transaction
 10 33 creating an interest in property, including taking by sale,
 10 34 lease, discount, negotiation, mortgage, pledge, voluntary
 10 35 lien, security interest, issue, or reissue, or gift, or any
 11  1 other voluntary transaction creating an interest in property.
 11  2    33.  ad.  "Purchaser" means a person who takes by purchase.
 11  3    ae.  "Record" means information that is inscribed on a
 11  4 tangible medium or that is stored in an electronic or other
 11  5 medium and is retrievable in perceivable form.
 11  6    34.  af.  "Remedy" means any remedial right to which an
 11  7 aggrieved party is entitled with or without resort to a
 11  8 tribunal.
 11  9    35.  ag.  "Representative" includes means a person
 11 10 empowered to act for another, including an agent, an officer
 11 11 of a corporation or association, and a trustee, executor, or
 11 12 administrator of an estate, or any other person empowered to
 11 13 act for another.
 11 14    36.  ah.  "Rights" "Right" includes remedies remedy.
 11 15    37. a.  ai.  "Security interest" means an interest in
 11 16 personal property or fixtures which secures payment or
 11 17 performance of an obligation.  The term also "Security
 11 18 interest" includes any interest of a consignor and a buyer of
 11 19 accounts, chattel paper, a payment intangible, or a promissory
 11 20 note in a transaction that is subject to Article 9.  The
 11 21 "Security interest" does not include the special property
 11 22 interest of a buyer of goods on identification of those goods
 11 23 to a contract for sale under section 554.2401 is not a
 11 24 "security interest", but a buyer may also acquire a "security
 11 25 interest" by complying with Article 9.  Except as otherwise
 11 26 provided in section 554.2505, the right of a seller or lessor
 11 27 of goods under Article 2 or 13 to retain or acquire possession
 11 28 of the goods is not a "security interest", but a seller or
 11 29 lessor may also acquire a "security interest" by complying
 11 30 with Article 9.  The retention or reservation of title by a
 11 31 seller of goods notwithstanding shipment or delivery to the
 11 32 buyer (section 554.2401) under section 554.2401 is limited in
 11 33 effect to a reservation of a "security interest".  Whether
 11 34    b.  Whether a transaction in the form of a lease creates a
 11 35 lease or security interest "security interest" is determined
 12  1 by the facts of each case; however, a transaction creates a
 12  2 security interest if the consideration the lessee is to pay
 12  3 the lessor for the right to possession and use of the goods is
 12  4 an obligation for the term of the lease not subject to
 12  5 termination by the lessee, and
 12  6    (1)  the original term of the lease is equal to or greater
 12  7 than the remaining economic life of the goods,
 12  8    (2)  the lessee is bound to renew the lease for the
 12  9 remaining economic life of the goods or is bound to become the
 12 10 owner of the goods,
 12 11    (3)  the lessee has an option to renew the lease for the
 12 12 remaining economic life of the goods for no additional
 12 13 consideration or nominal additional consideration upon
 12 14 compliance with the lease agreement, or
 12 15    (4)  the lessee has an option to become the owner of the
 12 16 goods for no additional consideration or nominal additional
 12 17 consideration upon compliance with the lease agreement
 12 18 pursuant to section 554.1203.
 12 19    c.  A transaction does not create a security interest
 12 20 merely because it provides that
 12 21    (1)  the present value of the consideration the lessee is
 12 22 obligated to pay the lessor for the right to possession and
 12 23 use of the goods is substantially equal to or is greater than
 12 24 the fair market value of the goods at the time the lease is
 12 25 entered into,
 12 26    (2)  the lessee assumes risk of loss of the goods, or
 12 27 agrees to pay taxes, insurance, filing, recording, or
 12 28 registration fees, or service or maintenance costs with
 12 29 respect to the goods,
 12 30    (3)  the lessee has an option to renew the lease or to
 12 31 become the owner of the goods,
 12 32    (4)  the lessee has an option to renew the lease for a
 12 33 fixed rent that is equal to or greater than the reasonably
 12 34 predictable fair market rent for the use of the goods for the
 12 35 term of the renewal at the time the option is to be performed,
 13  1 or
 13  2    (5)  the lessee has an option to become the owner of the
 13  3 goods for a fixed price that is equal to or greater than the
 13  4 reasonably predictable fair market value of the goods at the
 13  5 time the option is to be performed.
 13  6    d.  For purposes of this subsection:
 13  7    (1)  Additional consideration is not nominal if (i) when
 13  8 the option to renew the lease is granted to the lessee the
 13  9 rent is stated to be the fair market rent for the use of the
 13 10 goods for the term of the renewal determined at the time the
 13 11 option is to be performed, or (ii) when the option to become
 13 12 the owner of the goods is granted to the lessee the price is
 13 13 stated to be the fair market value of the goods determined at
 13 14 the time the option is to be performed.  Additional
 13 15 consideration is nominal if it is less than the lessee's
 13 16 reasonably predictable cost of performing under the lease
 13 17 agreement if the option is not exercised;
 13 18    (2)  "Reasonably predictable" and "remaining economic life
 13 19 of the goods" are to be determined with reference to the facts
 13 20 and circumstances at the time the transaction is entered into;
 13 21 and
 13 22    (3)  "Present value" means the amount as of a date certain
 13 23 of one or more sums payable in the future, discounted to the
 13 24 date certain.  The discount is determined by the interest rate
 13 25 specified by the parties if the rate is not manifestly
 13 26 unreasonable at the time the transaction is entered into;
 13 27 otherwise, the discount is determined by a commercially
 13 28 reasonable rate that takes into account the facts and
 13 29 circumstances of each case at the time the transaction was
 13 30 entered into.
 13 31    38.  aj.  "Send" in connection with any a writing, record,
 13 32 or notice means:
 13 33    (1)  to deposit in the mail or deliver for transmission by
 13 34 any other usual means of communication with postage or cost of
 13 35 transmission provided for and properly addressed and, in the
 14  1 case of an instrument, to an address specified thereon or
 14  2 otherwise agreed, or if there be none to any address
 14  3 reasonable under the circumstances.; or
 14  4    (2)  The receipt of in any writing other way to cause to be
 14  5 received any record or notice within the time at which it
 14  6 would have arrived if properly sent has the effect of a proper
 14  7 sending.
 14  8    39.  ak.  "Signed" includes using any symbol executed or
 14  9 adopted by a party with present intention to authenticate
 14 10 adopt or accept a writing.
 14 11    al.  "State" means a state of the United States, the
 14 12 District of Columbia, Puerto Rico, the United States Virgin
 14 13 Islands, or any territory or insular possession subject to the
 14 14 jurisdiction of the United States.
 14 15    40.  am.  "Surety" includes a guarantor or other secondary
 14 16 obligor.
 14 17    41.  "Telegram" includes a message transmitted by radio,
 14 18 teletype, cable, any mechanical method of transmission, or the
 14 19 like.
 14 20    42.  an.  "Term" means that portion of an agreement which
 14 21 that relates to a particular matter.
 14 22    43.  ao.  "Unauthorized" signature "Unauthorized signature"
 14 23 means one a signature made without actual, implied, or
 14 24 apparent authority and.  The term includes a forgery.
 14 25    44.  "Value".  Except as otherwise provided with respect to
 14 26 negotiable instruments and bank collections (sections
 14 27 554.3303, 554.4210, and 554.4211) a person gives "value" for
 14 28 rights if the person acquires them
 14 29    a.  in return for a binding commitment to extend credit or
 14 30 for the extension of immediately available credit whether or
 14 31 not drawn upon and whether or not a charge=back is provided
 14 32 for in the event of difficulties in collection; or
 14 33    b.  as security for or in total or partial satisfaction of
 14 34 a pre=existing claim; or
 14 35    c.  by accepting delivery pursuant to a pre=existing
 15  1 contract for purchase; or
 15  2    d.  generally, in return for any consideration sufficient
 15  3 to support a simple contract.
 15  4    45.  ap.  "Warehouse receipt" means a receipt issued by a
 15  5 person engaged in the business of storing goods for hire.
 15  6    46.  aq.  "Written" or "writing" "Writing" includes
 15  7 printing, typewriting, or any other intentional reduction to
 15  8 tangible form.  "Written" has a corresponding meaning.
 15  9    Sec. 12.  Section 554.1202, Code 2007, is amended to read
 15 10 as follows:
 15 11    554.1202  PRIMA FACIE EVIDENCE BY THIRD PARTY THIRD=PARTY
 15 12 DOCUMENTS.
 15 13    A document in due form purporting to be a bill of lading,
 15 14 policy or certificate of insurance, official weigher's or
 15 15 inspector's certificate, consular invoice, or any other
 15 16 document authorized or required by the contract to be issued
 15 17 by a third party shall be is prima facie evidence of its own
 15 18 authenticity and genuineness and of the facts stated in the
 15 19 document by the third party.
 15 20    Sec. 13.  NEW SECTION.  554.1202A  NOTICE == KNOWLEDGE.
 15 21    1.  Subject to subsection 6, a person has "notice" of a
 15 22 fact if the person:
 15 23    a.  has actual knowledge of it;
 15 24    b.  has received a notice or notification of it; or
 15 25    c.  from all the facts and circumstances known to the
 15 26 person at the time in question, has reason to know that it
 15 27 exists.
 15 28    2.  "Knowledge" means actual knowledge.  "Knows" has a
 15 29 corresponding meaning.
 15 30    3.  "Discover", "learn", or words of similar import refer
 15 31 to knowledge rather than to reason to know.
 15 32    4.  A person "notifies" or "gives" a notice or notification
 15 33 to another person by taking such steps as may be reasonably
 15 34 required to inform the other person in ordinary course,
 15 35 whether or not the other person actually comes to know of it.
 16  1    5.  Subject to subsection 6, a person "receives" a notice
 16  2 or notification when:
 16  3    a.  it comes to that person's attention; or
 16  4    b.  it is duly delivered in a form reasonable under the
 16  5 circumstances at the place of business through which the
 16  6 contract was made or at another location held out by that
 16  7 person as the place for receipt of such communications.
 16  8    6.  Notice, knowledge, or a notice or notification received
 16  9 by an organization is effective for a particular transaction
 16 10 from the time it is brought to the attention of the individual
 16 11 conducting that transaction and, in any event, from the time
 16 12 it would have been brought to the individual's attention if
 16 13 the organization had exercised due diligence.  An organization
 16 14 exercises due diligence if it maintains reasonable routines
 16 15 for communicating significant information to the person
 16 16 conducting the transaction and there is reasonable compliance
 16 17 with the routines.  Due diligence does not require an
 16 18 individual acting for the organization to communicate
 16 19 information unless the communication is part of the
 16 20 individual's regular duties or the individual has reason to
 16 21 know of the transaction and that the transaction would be
 16 22 materially affected by the information.
 16 23    Sec. 14.  NEW SECTION.  554.1203A  LEASE DISTINGUISHED FROM
 16 24 SECURITY INTEREST.
 16 25    1.  Whether a transaction in the form of a lease creates a
 16 26 lease or security interest is determined by the facts of each
 16 27 case.
 16 28    2.  A transaction in the form of a lease creates a security
 16 29 interest if the consideration that the lessee is to pay the
 16 30 lessor for the right to possession and use of the goods is an
 16 31 obligation for the term of the lease and is not subject to
 16 32 termination by the lessee, and:
 16 33    a.  the original term of the lease is equal to or greater
 16 34 than the remaining economic life of the goods;
 16 35    b.  the lessee is bound to renew the lease for the
 17  1 remaining economic life of the goods or is bound to become the
 17  2 owner of the goods;
 17  3    c.  the lessee has an option to renew the lease for the
 17  4 remaining economic life of the goods for no additional
 17  5 consideration or for nominal additional consideration upon
 17  6 compliance with the lease agreement; or
 17  7    d.  the lessee has an option to become the owner of the
 17  8 goods for no additional consideration or for nominal
 17  9 additional consideration upon compliance with the lease
 17 10 agreement.
 17 11    3.  A transaction in the form of a lease does not create a
 17 12 security interest merely because:
 17 13    a.  the present value of the consideration the lessee is
 17 14 obligated to pay the lessor for the right to possession and
 17 15 use of the goods is substantially equal to or is greater than
 17 16 the fair market value of the goods at the time the lease is
 17 17 entered into;
 17 18    b.  the lessee assumes risk of loss of the goods;
 17 19    c.  the lessee agrees to pay, with respect to the goods,
 17 20 taxes, insurance, filing, recording, or registration fees, or
 17 21 service or maintenance costs;
 17 22    d.  the lessee has an option to renew the lease or to
 17 23 become the owner of the goods;
 17 24    e.  the lessee has an option to renew the lease for a fixed
 17 25 rent that is equal to or greater than the reasonably
 17 26 predictable fair market rent for the use of the goods for the
 17 27 term of the renewal at the time the option is to be performed;
 17 28 or
 17 29    f.  the lessee has an option to become the owner of the
 17 30 goods for a fixed price that is equal to or greater than the
 17 31 reasonably predictable fair market value of the goods at the
 17 32 time the option is to be performed.
 17 33    4.  Additional consideration is nominal if it is less than
 17 34 the lessee's reasonably predictable cost of performing under
 17 35 the lease agreement if the option is not exercised.
 18  1 Additional consideration is not nominal if:
 18  2    a.  when the option to renew the lease is granted to the
 18  3 lessee, the rent is stated to be the fair market rent for the
 18  4 use of the goods for the term of the renewal determined at the
 18  5 time the option is to be performed; or
 18  6    b.  when the option to become the owner of the goods is
 18  7 granted to the lessee, the price is stated to be the fair
 18  8 market value of the goods determined at the time the option is
 18  9 to be performed.
 18 10    5.  The "remaining economic life of the goods" and
 18 11 "reasonably predictable" fair market rent, fair market value,
 18 12 or cost of performing under the lease agreement must be
 18 13 determined with reference to the facts and circumstances at
 18 14 the time the transaction is entered into.
 18 15    Sec. 15.  Section 554.1204, Code 2007, is amended to read
 18 16 as follows:
 18 17    554.1204  TIME == REASONABLE TIME == "SEASONABLY"
 18 18 SEASONABLENESS.
 18 19    1.  Whenever this chapter requires any action to be taken
 18 20 within a reasonable time, any time which is not manifestly
 18 21 unreasonable may be fixed by agreement.
 18 22    2.  What is Whether a reasonable time for taking any an
 18 23 action required by this chapter is reasonable depends on the
 18 24 nature, purpose, and circumstances of such the action.
 18 25    3.  2.  An action is taken "seasonably" when seasonably if
 18 26 it is taken at or within the time agreed or, if no time is
 18 27 agreed, at or within a reasonable time.
 18 28    Sec. 16.  NEW SECTION.  554.1204A  VALUE.
 18 29    Except as otherwise provided in Articles 3, 4, and 5, a
 18 30 person gives value for rights if the person acquires them:
 18 31    1.  in return for a binding commitment to extend credit or
 18 32 for the extension of immediately available credit, whether or
 18 33 not drawn upon and whether or not a charge=back is provided
 18 34 for in the event of difficulties in collection;
 18 35    2.  as security for, or in total or partial satisfaction
 19  1 of, a preexisting claim;
 19  2    3.  by accepting delivery under a preexisting contract for
 19  3 purchase; or
 19  4    4.  in return for any consideration sufficient to support a
 19  5 simple contract.
 19  6    Sec. 17.  Section 554.1205, Code 2007, is amended to read
 19  7 as follows:
 19  8    554.1205  COURSE OF PERFORMANCE, COURSE OF DEALING, AND
 19  9 USAGE OF TRADE.
 19 10    1.  A "course of performance" is a sequence of conduct
 19 11 between the parties to a particular transaction that exists
 19 12 if:
 19 13    a.  the agreement of the parties with respect to the
 19 14 transaction involves repeated occasions for performance by a
 19 15 party; and
 19 16    b.  the other party, with knowledge of the nature of the
 19 17 performance and opportunity for objection to it, accepts the
 19 18 performance or acquiesces in it without objection.
 19 19    1.  2.  A course of dealing "course of dealing" is a
 19 20 sequence of previous conduct concerning previous transactions
 19 21 between the parties to a particular transaction which that is
 19 22 fairly to be regarded as establishing a common basis of
 19 23 understanding for interpreting their expressions and other
 19 24 conduct.
 19 25    2.  3.  A usage of trade "usage of trade" is any practice
 19 26 or method of dealing having such regularity of observance in a
 19 27 place, vocation, or trade as to justify an expectation that it
 19 28 will be observed with respect to the transaction in question.
 19 29 The existence and scope of such a usage are to must be proved
 19 30 as facts.  If it is established that such a usage is embodied
 19 31 in a written trade code or similar writing record, the
 19 32 interpretation of the writing record is for the court a
 19 33 question of law.
 19 34    3.  4.  A course of performance or course of dealing
 19 35 between the parties and any or usage of trade in the vocation
 20  1 or trade in which they are engaged or of which they are or
 20  2 should be aware give particular meaning to and supplement or
 20  3 qualify terms of an is relevant in ascertaining the meaning of
 20  4 the parties' agreement, may give particular meaning to
 20  5 specific terms of the agreement, and may supplement or qualify
 20  6 the terms of the agreement.  A usage of trade applicable in
 20  7 the place in which part of the performance under the agreement
 20  8 is to occur may be so utilized as to that part of the
 20  9 performance.
 20 10    4.  5.  The Except as otherwise provided in subsection 6,
 20 11 the express terms of an agreement and an any applicable course
 20 12 of dealing, or usage of trade shall must be construed wherever
 20 13 reasonable as consistent with each other; but when.  If such a
 20 14 construction is unreasonable:
 20 15    a.  express terms control both prevail over course of
 20 16 performance, course of dealing, and usage of trade;
 20 17    b.  course of performance prevails over course of dealing
 20 18 and usage of trade; and
 20 19    c.  course of dealing controls prevails over usage of
 20 20 trade.
 20 21    5.  6.  An applicable usage of trade in the place where any
 20 22 part Subject to section 554.2209, a course of performance is
 20 23 to occur shall be used in interpreting the agreement as to
 20 24 that part relevant to show a waiver or modification of any
 20 25 term inconsistent with the course of the performance.
 20 26    6.  7.  Evidence of a relevant usage of trade offered by
 20 27 one party is not admissible unless and until that party has
 20 28 given the other party such notice as that the court finds
 20 29 sufficient to prevent unfair surprise to the latter other
 20 30 party.
 20 31    Sec. 18.  NEW SECTION.  554.1206A  PRESUMPTIONS.
 20 32    Whenever this chapter creates a "presumption" with respect
 20 33 to a fact, or provides that a fact is "presumed", the trier of
 20 34 fact must find the existence of the fact unless and until
 20 35 evidence is introduced that supports a finding of its
 21  1 nonexistence.
 21  2    Sec. 19.  Section 554.1207, subsection 1, Code 2007, is
 21  3 amended to read as follows:
 21  4    1.  A party who, that with explicit reservation of rights,
 21  5 performs or promises performance or assents to performance in
 21  6 a manner demanded or offered by the other party does not
 21  7 thereby prejudice the rights reserved.  Such words as "without
 21  8 prejudice", "under protest", or the like are sufficient.
 21  9    Sec. 20.  Section 554.1208, Code 2007, is amended to read
 21 10 as follows:
 21 11    554.1208  OPTION TO ACCELERATE AT WILL.
 21 12    A term providing that one party or that party's successor
 21 13 in interest may accelerate payment or performance or require
 21 14 collateral or additional collateral "at will" or "when when
 21 15 the party deems "deems itself insecure" or in words of similar
 21 16 import shall be construed to mean, means that that party shall
 21 17 have has power to do so only if that party in good faith
 21 18 believes that the prospect of payment or performance is
 21 19 impaired.  The burden of establishing lack of good faith is on
 21 20 the party against whom which the power has been exercised.
 21 21    Sec. 21.  Section 554.1209, Code 2007, is amended to read
 21 22 as follows:
 21 23    554.1209  SUBORDINATED OBLIGATIONS.
 21 24    An obligation may be issued as subordinated to payment
 21 25 performance of another obligation of the person obligated, or
 21 26 a creditor may subordinate the creditor's its right to payment
 21 27 performance of an obligation by agreement with either the
 21 28 person obligated or another creditor of the person obligated.
 21 29 Such a subordination Subordination does not create a security
 21 30 interest as against either the common debtor or a subordinated
 21 31 creditor.  This section shall be construed as declaring the
 21 32 law as it existed prior to the enactment of this section and
 21 33 not as modifying it.
 21 34                             PART 3
 21 35           TERRITORIAL APPLICABILITY AND GENERAL RULES
 22  1    Sec. 22.  NEW SECTION.  554.1302  VARIATION BY AGREEMENT.
 22  2    1.  Except as otherwise provided in subsection 2 or
 22  3 elsewhere in this chapter, the effect of provisions of this
 22  4 chapter may be varied by agreement.
 22  5    2.  The obligations of good faith, diligence,
 22  6 reasonableness, and care prescribed by this chapter may not be
 22  7 disclaimed by agreement.  The parties, by agreement, may
 22  8 determine the standards by which the performance of those
 22  9 obligations is to be measured if those standards are not
 22 10 manifestly unreasonable.  Whenever this chapter requires an
 22 11 action to be taken within a reasonable time, a time that is
 22 12 not manifestly unreasonable may be fixed by agreement.
 22 13    3.  The presence in certain provisions of this chapter of
 22 14 the phrase "unless otherwise agreed", or words of similar
 22 15 import, does not imply that the effect of other provisions may
 22 16 not be varied by agreement under this section.
 22 17                           DIVISION II
 22 18             CONFORMING AMENDMENTS TO OTHER ARTICLES
 22 19                             PART A
 22 20                            ARTICLE 2
 22 21    Sec. 23.  Section 554.2103, subsection 1, paragraph b, Code
 22 22 2007, is amended by striking the paragraph.
 22 23    Sec. 24.  Section 554.2202, subsection a, Code 2007, is
 22 24 amended to read as follows:
 22 25    a.  by course of performance, course of dealing, or usage
 22 26 of trade (section 554.1205) 554.1303) or by course of
 22 27 performance (section 554.2208); and
 22 28                             PART B
 22 29                            ARTICLE 3
 22 30    Sec. 25.  Section 554.3103, subsection 1, paragraph d, Code
 22 31 2007, is amended by striking the paragraph.
 22 32    Sec. 26.  Code 554.3103, subsection 1, paragraph j, Code
 22 33 2007, is amended to read as follows:
 22 34    j.  "Prove" with respect to a fact means to meet the burden
 22 35 of establishing the fact (section 554.1201, subsection 8) 2,
 23  1 paragraph "h").
 23  2                             PART C
 23  3                            ARTICLE 4
 23  4    Sec. 27.  Section 554.4104, subsection 3, Code 2007, is
 23  5 amended to read as follows:
 23  6    3.  The following definitions in other Articles apply to
 23  7 this Article:
 23  8    "Acceptance"                         Section 554.3409
 23  9    "Alteration"                         Section 554.3407
 23 10    "Cashier's check"                    Section 554.3104
 23 11    "Certificate of deposit"             Section 554.3104
 23 12    "Certified check"                    Section 554.3409
 23 13    "Check"                              Section 554.3104
 23 14    "Good faith"                         Section 554.3103
 23 15    "Holder in due course"               Section 554.3302
 23 16    "Instrument"                         Section 554.3104
 23 17    "Notice of dishonor"                 Section 554.3503
 23 18    "Order"                              Section 554.3103
 23 19    "Ordinary care"                      Section 554.3103
 23 20    "Person entitled
 23 21 to enforce"                             Section 554.3301
 23 22    "Presentment"                        Section 554.3501
 23 23    "Promise"                            Section 554.3103
 23 24    "Prove"                              Section 554.3103
 23 25    "Teller's check"                     Section 554.3104
 23 26    "Unauthorized signature"             Section 554.3403
 23 27                             PART D
 23 28                            ARTICLE 5
 23 29    Sec. 28.  Section 554.5103, subsection 3, Code 2007, is
 23 30 amended to read as follows:
 23 31    3.  With the exception of this subsection, subsections 1
 23 32 and 4, section 554.5102, subsection 1, paragraphs "i" and "j",
 23 33 section 554.5106, subsection 4, and section 554.5114,
 23 34 subsection 4, and except to the extent prohibited in section
 23 35 554.1102, subsection 3, 554.1302 and section 554.5117,
 24  1 subsection 4, the effect of this Article may be varied by
 24  2 agreement or by a provision stated or incorporated by
 24  3 reference in an undertaking.  A term in an agreement or
 24  4 undertaking generally excusing liability or generally limiting
 24  5 remedies for failure to perform obligations is not sufficient
 24  6 to vary obligations prescribed by this Article.
 24  7                             PART E
 24  8                            ARTICLE 8
 24  9    Sec. 29.  Section 554.8102, subsection 1, paragraph j, Code
 24 10 2007, is amended by striking the paragraph.
 24 11                             PART F
 24 12                            ARTICLE 9
 24 13    Sec. 30.  Section 554.9102, subsection 1, paragraph aq,
 24 14 Code 2007, is amended by striking the paragraph.
 24 15                             PART G
 24 16                           ARTICLE 12
 24 17    Sec. 31.  Section 554.12105, subsection 1, paragraph f,
 24 18 Code 2007, is amended by striking the paragraph.
 24 19    Sec. 32.  Section 554.12105, subsection 1, paragraph g,
 24 20 Code 2007, is amended to read as follows:
 24 21    g.  "Prove" with respect to a fact means to meet the burden
 24 22 of establishing the fact as defined in section 554.1201,
 24 23 subsection 8 2, paragraph "h".
 24 24    Sec. 33.  Section 554.12106, subsection 1, Code 2007, is
 24 25 amended to read as follows:
 24 26    1.  The time of receipt of a payment order or communication
 24 27 canceling or amending a payment order is determined by the
 24 28 rules applicable to receipt of a notice stated in section
 24 29 554.1201, subsection 27 554.1202.  A receiving bank may
 24 30 establish a cut=off time or times on a funds=transfer business
 24 31 day for the receipt and processing of payment orders, and
 24 32 communications canceling or amending payment orders.
 24 33 Different cut=off times may apply to payment orders,
 24 34 cancellations, or amendments, or to different categories of
 24 35 payment orders, cancellations, or amendments.  A cut=off time
 25  1 may apply to senders generally, or different cut=off times may
 25  2 apply to different senders or categories of payment orders.
 25  3 If a payment order or communication canceling or amending a
 25  4 payment order is received after the close of a funds=transfer
 25  5 business day or after the appropriate cut=off time on a
 25  6 funds=transfer business day, the receiving bank may treat the
 25  7 payment order or communication as received at the opening of
 25  8 the next funds=transfer business day.
 25  9    Sec. 34.  Section 554.12204, subsection 2, Code 2007, is
 25 10 amended to read as follows:
 25 11    2.  Reasonable time under subsection 1 may be fixed by
 25 12 agreement as provided in section 554.1204 554.1302, subsection
 25 13 1 2, but the obligation of a receiving bank to refund payment
 25 14 as stated in subsection 1 may not otherwise be varied by
 25 15 agreement.
 25 16                             PART H
 25 17                           ARTICLE 13
 25 18    Sec. 35.  Section 554.13501, subsection 4, Code 2007, is
 25 19 amended to read as follows:
 25 20    4.  Except as otherwise provided in section 554.1106
 25 21 554.1305, subsection 1, of or this Article or the lease
 25 22 agreement, the rights and remedies referred to in subsections
 25 23 2 and 3 are cumulative.
 25 24    Sec. 36.  Section 554.13518, subsection 2, Code 2007, is
 25 25 amended to read as follows:
 25 26    2.  Except as otherwise provided with respect to damages
 25 27 liquidated in the lease agreement (section 554.13504) or
 25 28 otherwise determined pursuant to agreement of the parties
 25 29 (sections 554.1102, subsection 3, 554.1302 and 554.13503), if
 25 30 a lessee's cover is by a lease agreement substantially similar
 25 31 to the original lease agreement and the new lease agreement is
 25 32 made in good faith and in a commercially reasonable manner,
 25 33 the lessee may recover from the lessor as damages (i) the
 25 34 present value, as of the date of the commencement of the term
 25 35 of the new lease agreement, of the rent under the new lease
 26  1 agreement applicable to that period of the new lease term
 26  2 which is comparable to the then remaining term of the original
 26  3 lease agreement minus the present value as of the same date of
 26  4 the total rent for the then remaining lease term of the
 26  5 original lease agreement, and (ii) any incidental or
 26  6 consequential damages, less expenses saved in consequence of
 26  7 the lessor's default.
 26  8    Sec. 37.  Section 554.13519, subsection 1, Code 2007, is
 26  9 amended to read as follows:
 26 10    1.  Except as otherwise provided with respect to damages
 26 11 liquidated in the lease agreement (section 554.13504) or
 26 12 otherwise determined pursuant to agreement of the parties
 26 13 (sections 554.1102, subsection 3, 554.1302 and 554.13503), if
 26 14 a lessee elects not to cover or a lessee elects to cover and
 26 15 the cover is by lease agreement that for any reason does not
 26 16 qualify for treatment under section 554.13518, subsection 2,
 26 17 or is by purchase or otherwise, the measure of damages for
 26 18 nondelivery or repudiation by the lessor or for rejection or
 26 19 revocation of acceptance by the lessee is the present value,
 26 20 as of the date of the default, of the then market rent minus
 26 21 the present value as of the same date of the original rent,
 26 22 computed for the remaining lease term of the original lease
 26 23 agreement, together with incidental and consequential damages,
 26 24 less expenses saved in consequence of the lessor's default.
 26 25    Sec. 38.  Section 554.13527, subsection 2, Code 2007, is
 26 26 amended to read as follows:
 26 27    2.  Except as otherwise provided with respect to damages
 26 28 liquidated in the lease agreement (section 554.13504) or
 26 29 otherwise determined pursuant to agreement of the parties
 26 30 (sections 554.1102, subsection 3, 554.1302 and 554.13503), if
 26 31 the disposition is by lease agreement substantially similar to
 26 32 the original lease agreement and the new lease agreement is
 26 33 made in good faith and in a commercially reasonable manner,
 26 34 the lessor may recover from the lessee as damages (i) accrued
 26 35 and unpaid rent as of the date of the commencement of the term
 27  1 of the new lease agreement, (ii) the present value, as of the
 27  2 same date, of the total rent for the remaining lease term of
 27  3 the original lease agreement minus the present value, as of
 27  4 the same date, of the rent under the new lease agreement
 27  5 applicable to that period of the new lease term which is
 27  6 comparable to the then remaining term of the original lease
 27  7 agreement, and (iii) any incidental damages allowed under
 27  8 section 554.13530, less expenses saved in consequence of the
 27  9 lessee's default.
 27 10    Sec. 39.  Section 554.13528, subsection 1, Code 2007, is
 27 11 amended to read as follows:
 27 12    1.  Except as otherwise provided with respect to damages
 27 13 liquidated in the lease agreement (section 554.13504) or
 27 14 otherwise determined pursuant to agreement of the parties
 27 15 (sections 554.1102, subsection 3, 554.1302 and 554.13503), if
 27 16 a lessor elects to retain the goods or a lessor elects to
 27 17 dispose of the goods and the disposition is by lease agreement
 27 18 that for any reason does not qualify for treatment under
 27 19 section 554.13527, subsection 2, or is by sale or otherwise,
 27 20 the lessor may recover from the lessee as damages for a
 27 21 default of the type described in section 554.13523, subsection
 27 22 1, or section 554.13523, subsection 3, paragraph "a", or, if
 27 23 agreed, for other default of the lessee, (i) accrued and
 27 24 unpaid rent as of the date of default if the lessee has never
 27 25 taken possession of the goods, or, if the lessee has taken
 27 26 possession of the goods, as of the date the lessor repossesses
 27 27 the goods or an earlier date on which the lessee makes a
 27 28 tender of the goods to the lessor, (ii) the present value as
 27 29 of the date determined under clause (i) of the total rent for
 27 30 the then remaining lease term of the original lease agreement
 27 31 minus the present value as of the same date of the market rent
 27 32 at the place where the goods are located computed for the same
 27 33 lease term, and (iii) any incidental damages allowed under
 27 34 section 554.13530, less expenses saved in consequence of the
 27 35 lessee's default.
 28  1                             PART I
 28  2         PROVISIONS OUTSIDE THE UNIFORM COMMERCIAL CODE
 28  3    Sec. 40.  Section 3.3, Code 2007, is amended to read as
 28  4 follows:
 28  5    3.3  HEADNOTES AND HISTORICAL REFERENCES.
 28  6    Proper headnotes may be placed at the beginning of a
 28  7 section of a bill or a Code section, and at the end of a Code
 28  8 section there may be placed a reference to the section number
 28  9 of the Code, or any Iowa Act from which the matter of the Code
 28 10 section was taken.  However, except as provided in for the
 28 11 uniform commercial code, pursuant to section 554.1109
 28 12 554.1107, neither said headnotes nor said historical shall not
 28 13 be considered as part of the law as enacted.  Historical
 28 14 references shall be considered as a part of the law as
 28 15 enacted.
 28 16    Sec. 41.  Section 537.3603, subsection 6, Code 2007, is
 28 17 amended to read as follows:
 28 18    6.  A lease or agreement which constitutes a security
 28 19 interest as defined in section 554.1201, subsection 37 2.
 28 20    Sec. 42.  Section 554D.104, subsection 2, paragraph b, Code
 28 21 2007, is amended to read as follows:
 28 22    b.  Chapter 554 other than articles 2 and 13 and sections
 28 23 554.1107 and 554.1206 section 554.1306.
 28 24                          DIVISION III
 28 25                      CONTINGENT PROVISIONS
 28 26    Sec. 43.  Section 554.1201, subsections 5, 6, 14, 15, 20,
 28 27 and 45, Code 2007, are amended to read as follows:
 28 28    5.  e.  "Bearer" means the a person in control of a
 28 29 negotiable electronic document of title or a person in
 28 30 possession of an a negotiable instrument, negotiable tangible
 28 31 document of title, or certificated security that is payable to
 28 32 bearer or endorsed indorsed in blank.
 28 33    6.  f.  "Bill of lading" means a document of title
 28 34 evidencing the receipt of goods for shipment issued by a
 28 35 person engaged in the business of directly or indirectly
 29  1 transporting or forwarding goods, and includes an airbill.
 29  2 "Airbill" means a document serving for air transportation as a
 29  3 bill of lading does for marine or rail transportation, and
 29  4 includes an air consignment note or air waybill.  The term
 29  5 does not include a warehouse receipt.
 29  6    14.  o.  "Delivery", with respect to instruments an
 29  7 electronic document of title means voluntary transfer of
 29  8 control and with respect to an instrument, documents a
 29  9 tangible document of title, or chattel paper, or certificated
 29 10 securities means voluntary transfer of possession.
 29 11    15.  p.  "Document of title" includes bill of lading, dock
 29 12 warrant, dock receipt, warehouse receipt or order for the
 29 13 delivery of goods, and also any other document which means a
 29 14 record (i) that in the regular course of business or financing
 29 15 is treated as adequately evidencing that the person in
 29 16 possession or control of it the record is entitled to receive,
 29 17 control, hold, and dispose of the document record and the
 29 18 goods it the record covers and (ii) that purports to be issued
 29 19 by or addressed to a bailee and to cover goods in the bailee's
 29 20 possession which are either identified or are fungible
 29 21 portions of an identified mass.  The term includes a bill of
 29 22 lading, transport document, dock warrant, dock receipt,
 29 23 warehouse receipt, and order for delivery of goods.  To be a
 29 24 document of title a document must purport to be issued by or
 29 25 addressed to a bailee and purport to cover goods in the
 29 26 bailee's possession which are either identified or are
 29 27 fungible portions of an identified mass.  An electronic
 29 28 document of title means a document of title evidenced by a
 29 29 record consisting of information stored in an electronic
 29 30 medium.  A tangible document of title means a document of
 29 31 title evidenced by a record consisting of information that is
 29 32 inscribed on a tangible medium.
 29 33    20.  u.  "Holder", with respect to a negotiable instrument,
 29 34 means:
 29 35    (1)  the person in possession if the of a negotiable
 30  1 instrument that is payable either to bearer or, in the case of
 30  2 an instrument payable to an identified person, if the
 30  3 identified that is the person is in possession.;
 30  4    (2)  "Holder" with respect to a document of title means the
 30  5 person in possession of a negotiable tangible document of
 30  6 title if the goods are deliverable either to bearer or to the
 30  7 order of the person in possession.; or
 30  8    (3)  the person in control of a negotiable electronic
 30  9 document of title.
 30 10    45.  ap.  "Warehouse receipt" means a receipt document of
 30 11 title issued by a person engaged in the business of storing
 30 12 goods for hire.
 30 13    Sec. 44.   CONFLICTING PROVISIONS.
 30 14    1.  If 2007 Iowa Acts, House File 716 is enacted,
 30 15 notwithstanding section 4.1, all of the following apply:
 30 16    a.  The amendments to section 554.1201, subsections 5, 6,
 30 17 14, 15, 20, and 45, Code 2007, as enacted in this division of
 30 18 this Act, prevail over conflicting amendments to section
 30 19 554.1201, subsections 5, 6, 14, 15, 20, and 45, Code 2007, as
 30 20 enacted in division I of this Act.
 30 21    b.  The amendments to section 554.1201, subsections 25, 26,
 30 22 and 27, as enacted in division I of this Act, prevail over
 30 23 conflicting amendments to section 554.1201, subsections 25,
 30 24 26, and 27, Code 2007, as enacted in 2007 Iowa Acts, House
 30 25 File 716.
 30 26    c.  The amendments to section 554.1201, subsections 5, 6,
 30 27 14, 15, 20, and 45, Code 2007, as enacted in this division of
 30 28 this Act, prevail over conflicting amendments to section
 30 29 554.1201, subsections 5, 6, 14, 15, 20, and 45, Code 2007, as
 30 30 enacted in 2007 Iowa Acts, House File 716.
 30 31    2.  If 2007 Iowa Acts, House File 716 is not enacted,
 30 32 notwithstanding section 4.8, the amendments to section
 30 33 554.1201, subsections 5, 6, 14, 15, 20, and 45, Code 2007, as
 30 34 enacted in division I of this Act, prevail over conflicting
 30 35 amendments to section 554.1201, subsections 5, 6, 14, 15, 20,
 31  1 and 45, Code 2007, as enacted in this division of this Act.
 31  2                           DIVISION IV
 31  3                  TRANSFERS AND RECODIFICATIONS
 31  4    Sec. 45.  Section 554.1105, Code 2007, is transferred to
 31  5 section 554.1301.
 31  6    Sec. 46.  Section 554.1106, Code 2007, is transferred to
 31  7 section 554.1305.
 31  8    Sec. 47.  Section 554.1107, Code 2007, is transferred to
 31  9 section 554.1306.
 31 10    Sec. 48.  Section 554.1108, Code 2007, is transferred to
 31 11 section 554.1105.
 31 12    Sec. 49.  Section 554.1109, Code 2007, is transferred to
 31 13 section 554.1107.
 31 14    Sec. 50.  Section 554.1202, Code 2007, is transferred to
 31 15 section 554.1307.
 31 16    Sec. 51.  Section 554.1203, Code 2007, is transferred to
 31 17 section 554.1304.
 31 18    Sec. 52.  Section 554.1204, Code 2007, is transferred to
 31 19 section 554.1205.
 31 20    Sec. 53.  Section 554.1205, Code 2007, is transferred to
 31 21 section 554.1303.
 31 22    Sec. 54.  Section 554.1207, Code 2007, is transferred to
 31 23 section 554.1308.
 31 24    Sec. 55.  Section 554.1208, Code 2007, is transferred to
 31 25 section 554.1309.
 31 26    Sec. 56.  Section 554.1209, Code 2007, is transferred to
 31 27 section 554.1310.
 31 28    Sec. 57.  CODIFICATION.
 31 29    1.  The Code editor shall codify the following new Code
 31 30 sections, as enacted in this Act, into the following Code
 31 31 sections, which existed immediately prior to the effective
 31 32 date of this Act and which are repealed or transferred
 31 33 elsewhere by this Act:
 31 34    a.  Section 554.1102A to section 554.1102 following its
 31 35 repeal in this Act.
 32  1    b.  Section 554.1106A to section 554.1106 following its
 32  2 transfer in this Act.
 32  3    c.  Section 554.1108A to section 554.1108 following its
 32  4 transfer in this Act.
 32  5    d.  Section 554.1202A to section 554.1202 following its
 32  6 transfer in this Act.
 32  7    e.  Section 554.1203A to section 554.1203 following its
 32  8 transfer in this Act.
 32  9    f.  Section 554.1204A to section 554.1204 following its
 32 10 transfer in this Act.
 32 11    g.  Section 554.1206A to section 554.1206 following its
 32 12 transfer in this Act.
 32 13    2.  The Code editor may transfer section 554.1110 to
 32 14 section 554.1110A.
 32 15                           DIVISION V
 32 16                             REPEALS
 32 17    Sec. 58.  Section 554.1102, Code 2007, is repealed.
 32 18    Sec. 59.  Section 554.1206, Code 2007, is repealed.
 32 19    Sec. 60.  Section 554.2208, Code 2007, is repealed.
 32 20    Sec. 61.  Section 554.13207, Code 2007, is repealed.
 32 21
 32 22
 32 23                                                             
 32 24                               JOHN P. KIBBIE
 32 25                               President of the Senate
 32 26
 32 27
 32 28                                                             
 32 29                               PATRICK J. MURPHY
 32 30                               Speaker of the House
 32 31
 32 32    I hereby certify that this bill originated in the Senate and
 32 33 is known as Senate File 535, Eighty=second General Assembly.
 32 34
 32 35
 33  1                                                             
 33  2                               MICHAEL E. MARSHALL
 33  3                               Secretary of the Senate
 33  4 Approved                , 2007
 33  5
 33  6
 33  7                                
 33  8 CHESTER J. CULVER
 33  9 Governor